FERC Returns to Full Strength and Faces Key Decisions

After months of delay, Kevin McIntyre was sworn in today as the newest chairman of the Federal Energy Regulatory Commission (FERC), the independent federal agency that oversees the electric power grid and gas pipeline permit approvals. This also puts FERC at full strength with five commissioners for the first time since October 2015.

To say that McIntyre joins FERC at an important time would be an understatement. The agency is at a crossroads. As an independent commission, FERC has largely avoided pressure from the White House and Congress in recent years, and hewed mostly to a non-partisan (if not always harmonious) path.

In the last several months, however, FERC has faced unprecedented pressure from the Trump Administration to subsidize coal plants and nuclear for their claimed resilience” attributes. McIntyre’s leadership will be a test of the extent to which he can withstand pressure from the White House to bend to its political ends.

McIntyre, formerly the co-leader of Jones Day’s global energy practice, is taking over FERC’s leadership from Neil Chatterjee, Mitch McConnell’s former energy advisor. Trump nominated Chatterjee to FERC and then to head it as of August 8, 2017, but also announced he wanted McIntyre to eventually be the chair. The Senate confirmed McIntyre and Rich Glick on November 2 (Glick most recently was Democratic General Counsel for the Senate Committee on Energy and Natural Resources.)

Comprising the full five member Commission are McIntyre, Chatterjee, Glick, Trump appointee Robert Powelson (ex-Pennsylvania utility commissioner) and Cheryl LaFleur, who joined FERC in 2010.

What will FERC do with the DOE proposal?
The most pressing matter before FERC is the highly controversial Department of Energy (DOE) proposal to require FERC to order power market operators in some regions of the country to bail out expensive and uncompetitive coal and nuclear power plants, significantly increasing consumers’ energy bills. Seizing on a rarely used provision of the Federal Power Act allowing the DOE to propose rules for FERC to consider, DOE’s proposal was without evidence to support it, was written without consulting FERC or the public, and appears heavily influenced by Trump supporters like Robert Murray (of Murray coal fame), FirstEnergy, and other coal-heavy interests.

We and many others told FERC in our public comments why the DOE’s proposal, crafted in the name of grid “resilience,” was built on a foundation of misrepresentations. The proposal would not make the grid more resilient. Economists, industry groups, consumers, power grid operators, and many others were united in their opposition to DOE’s proposal. It even drew the condemnation of eight former FERC chairmen and commissioners who panned the proposal as a “significant step backward” that would “raise costs for customers, and do so in a manner directly counter to FERC’s long experience.”

McIntyre joined FERC today, and FERC may act on its proposal as early as December 11. Therefore, McIntyre is tasked with coming up to speed in record time. It could respond in many ways, from doing nothing, to ordering affected grid operators to immediately comply with DOE’s proposal to bail out coal and nuclear generators.

Adopting DOE’s approach would mean supporting specific technologies and resources in contravention of the Federal Power Act’s fuel-neutral approach. A far better response would be to reject the DOE proposal and instead conduct a rational investigation into whether rules to make the grid more resilient are appropriate, and if so, what measures should be taken to accomplish that goal. Should FERC listen to experts across the industry, the solution will look nothing like DOE’s proposed coal and nuclear bailout.

PJM’s subsidy proposal also a problem
Also facing McIntyre and the commission will be plans by PJM, the nation’s largest power grid operator, to boost payments to coal and power plants in its markets (as opposed to insulating them from market competition entirely as DOE proposes to do)….